Canadian dollar continues to gain against USD on higher commodities

03/19/2012 08:59 EDT
|
Updated
05/19/2012 05:12 EDT

CP

TORONTO - The loonie continued to gain traction against its U.S. counterpart Monday as commodity prices moved higher and traders appeared optimistic that U.S. housing data this week will show the world's biggest economy is improving.

The Canadian dollar was up 0.45 of a cent to 101.27 cents US.

April oil prices rose $1.03 to US$108.09 a barrel, while gold bullion gained $11.50 to US$1,667.30 an ounce. Copper added three cents to US$3.91 a pound.

Commodity prices moved higher on growing confidence the global economy is improving — which would mean an increase in demand for resources — as fears of European debt crisis faded slightly and signals point to a rebound in the U.S. economy.

"Risk appetite is strong, U.S. economic data is encouraging and oil remains elevated," Scotiabank said in its daily currency report.

In an otherwise quiet week for economic data, investors will also get a look at Canadian retail sales for January on Thursday and February's Consumer Price Index on Friday.

The loonie's jump came despite Statistics Canada data showing that wholesale sales slipped one per cent in January to $49 billion, largely because of lower sales of motor vehicles and parts.

It was the second decrease in three months after a general upward trend that began last May.

"Canadian wholesalers in January did much worse than the street's expectations, with sales falling by one per cent against expectations of a slight increase," said CIBC World Markets economist Emanuella Enenajor.

"Taken together with the month’s weak manufacturing shipments figure, January is shaping up to be a soft month. Although Thursday’s retail print could point to healthy gains in that sector, we now expect January GDP to post at best a middling gain from the prior month."

Traders will take in the latest reports on U.S. housing starts and sales figures for new and existing homes later this week.

Economists expect housing starts rose by 0.3 per cent last month, while existing home sales gained 0.7 per cent and new home sales climbed by 1.4 per cent.

On Monday, data showed homebuilders' feelings about the current U.S. housing market haven't changed from February. But many are growing more optimistic that sales could pick up in the coming months.

The National Association of Home Builders/Wells Fargo says its builder sentiment index was unchanged this month at 28, the highest level since June 2007. The flat reading followed five straight increases. But builders said they are more hopeful about sales over the next six months.